Extending that out a bit, companies with an entrepreneurial culture tend not only to thrive, but also to pioneer over the long term. The ones filled with bozos explode, or more appropriately, implode.
When you run in the space(s)
(SIRI - Get Report)
runs in, you need an organization loaded with A-players -- people Steve Jobs would hire -- not folks he would consider bozos. But, most of all, you need a leader who can prevent the bozo explosion.
Mel Karmazin is a businessperson with a CEO profile straight out of the appendix of your stock MBA textbook. He comes in and runs a business well. And there is something to be said for the standard metrics that define a well-run business. Who could possibly scoff at the things Mel boasts about every time he opens a Sirius XM conference call?
Exceptional subscriber growth. Cash flow growth
These things, along with the ability and intent to return capital to shareholders -- another persistent Karmazin talking point -- are, of course, all excellent attributes. When they come too soon, however, and at the expense of innovation and reinvestment into the business, you sometimes have a situation where a solid bottom line in the near term sacrifices long-term growth and sustainability.
After John Malone and Howard Stern saved satellite radio from extinction, Karmazin became hyperfocused on running the business like a businessperson. That's fine, but when Starbucks looks more like a tech company than Sirius XM does, you've got a long-term problem.
For one reason or another, Sirius XM permabulls can't seem to wrap their heads around this proposition.
At day's end, the companies satellite radio competes with for ears -- from Apple to
-- look more like tech/Internet/new media companies than Sirius XM does. All of the free cash flow in the world ends up not meaning a darn thing if Sirius does not move to address this reality.
Sirius XM permabulls should hope that Malone's
wrestles control of Sirius XM away from Mel Karmazin's ego.
It's probably safe to say that Malone would immediately replace Karmazin with an A-player ready to compete in a way Mel simply can't.
At the time of publication, Rocco Pendola was long P